ICAS urges FRC contingency plans for Big Four collapse

The Institute of Chartered Accountants of Scotland has urged that the
regulator come up with contingency plans which can be effected in the event of
the failure of a Big Four firm.

The recommendation is among the main points made by the institute in its
response to the Market Participants Group’s interim report.

ICAS said it supported the FRC and acknowledges that several publicly listed
companies have made efforts to set contingency plans in place.

But it said the question that remained was whether a collapse could be
sustained by corporate effort alone.

David Wood, Executive Director, Technical Policy said that if the Big Four
became the Big Three, we would be looking at a huge amount of audit work to be
soaked up by other firms.

‘The corporate sector will tackle the risks on a company by company basis,
but the FRC should have a role to play as well. A framework should be created in
which audit expertise and public entity audits can be transferred smoothly to
other market participants in the case of a major firm withdrawal,’ he said.